Written by Ty Roush
Adidas CEO Bjorn Gulden said on Wednesday that the company was considering writing off remaining Yeezy merchandise inventory, worth $320 million. The German footwear company is spinning off the Kanye West-designed shoe line from its brand. West lost his partnership with Adidas after a series of anti-Semitic comments.
The company’s chief executive, Bjorn Gulden, said the situation was a “financially worst-case scenario”. Image source: THE ASSOCIATED PRESS
According to the Associated Press, Goulden said on Wednesday that the company’s write-off of Yeezy inventory was “the worst-case scenario financially.”
The company has sold hundreds of millions of dollars’ worth of leftover Yeezy shoes, and Goulden reportedly said: “We certainly hope to sell more shoes next year so we can get more value out of them and donate the proceeds. .” But no decision has been made yet.
Goulden also said the company has stored Yeezy inventory in several locations, but declined to say what steps the company would take if the inventory remains unsold.
Adidas on Wednesday included possible write-offs of Yeezy inventory in its earnings outlook for the year, saying in its full-year guidance that it expected an operating loss of about $106 million this year, compared with a previous forecast of a loss of $481 million.
After Adidas released its third-quarter earnings report, its stock price fell slightly by 2% to $90.46.
The financial report shows that Adidas’ footwear revenue increased by 6% year-on-year, apparel sales fell by 6%, and the company’s revenue fell by 6% to $6.4 billion.
$374.7 million. That’s how much Adidas earned from Yeezy sales in the entire third quarter. In the second quarter, Yeezy merchandise generated about $437 million in revenue, which Adidas said was comparable to sales in the same period last year. Throughout last year, the company earned $1.28 billion from Yeezy sales.
Adidas ended its partnership with West last year after the rapper made a series of anti-Semitic comments on social media. Earlier this year, the company announced it would begin selling off some of its remaining Yeezy inventory (worth $1.28 billion at the time) and donate a “substantial” amount of the sales to organizations fighting racism and anti-Semitism. Adidas previously considered writing off its remaining Yeezy inventory in August, with the sportswear company estimating at the time that the write-off would cost the company an additional $437 million. Adidas also estimates that “stopping Yeezy’s regular business” cost the company approximately $437 million in the first half of 2023. The write-off will reduce the value of the brand in Adidas’ financial statements.
Translated from https://www.forbes.com/sites/tylerroush/2023/11/08/adidas-could-write-off-value-of-unsold-yeezy-inventory-worth-320-million/?sh=3c52f91767f4
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